Capps v. Citizens' Nat. Bank of Longview , 1911 Tex. App. LEXIS 621 ( 1911 )

Appellants recovered a judgment against the city of Longview, and to enforce payment thereof sued out and had a writ of garnishment served on the Citizens' National Bank, the depository under the law of the funds of said city. The bank answered that as the depository of said funds it held for the city the sum of $9,513.15. It failed to state in its answer that it did not know of any person or persons having in his or their possession any effects belonging to the city. Because of this omission, the trial court, on motion of appellants, struck out the answer, but permitted the garnishee to file another answer curing the defect in the one originally filed. This action of the trial court and his refusal, when the original answer was stricken out, to render a judgment by default in appellants' favor against the garnishee, are complained of as error. It appears from a recital in the judgment that it was shown to the satisfaction of the trial court that the omission in the original answer was not a willful one, but was due to an oversight on the part of the garnishee. In Jemison v. Scarborough, 56 Tex. 360, as here, the answer of the garnishee was defective. The court said: "This is not a case where the garnishee is in default for the want of an answer. But here the answer is defective, and, standing alone, would not authorize a judgment to be rendered discharging him; but, until excepted to, it is such an answer as ought to preclude the rendition of a judgment by default against him. In such a case the plaintiff ought to except to the answer; for then, if the same is insufficient, the garnishee would have the right to amend, so as to fully place his case before the court." On the authority of that case, and Bank v. Robertson, 3 Tex. Civ. App. 150,22 S.W. 100, 24 S.W. 659, and Simon v. Ash, 1 Tex. Civ. App. 202,20 S.W. 719, we overrule the assignments presenting the contention.

At the instance of the garnishee, the city was made a party, and answered that the funds in the hands of the garnishee were in its custody as an agent of the law, and that same were not subject to the writ because needed by the city to pay its current expenses. It was shown that the city was incorporated under the general incorporation law (Sayles' Ann.Civ.St. 1897, cc. 1 to 10, tit. 18); that the funds held by the garnishee represented taxes collected by the city; that all except $1,426.51 of same constituted special funds for special purposes provided as authorized by law (Sayles' Ann.Civ.St. 1897, art 416); that the $1,426.51, which alone was available for the purpose of paying the current expenses of the city, was not sufficient for that purpose; that the funds held by the garnishee represented taxes collected by the city; and that the garnishee had been duly selected as provided by law (sections 34 to 40, Act May 1, 1905 [Gen. Laws 1905, pp. 395 to 398]; Act April 5, 1907, amendatory section 34 thereof [Gen. Laws 1907, p. 132]) as the depository of said funds Section 35 of said act 1905 requires a depository selected by a city in accordance with its provisions to enter into a bond payable to the city, conditioned for the "faithful performance of all duties and obligations devolving by law or ordinance upon said depository, and for the payment upon presentation of all checks drawn upon said depository by the city treasurer, whenever any funds shall be in said depository applicable to the payment of said check; and that all funds of the city shall be faithfully kept by said depository, and with the interest thereon according to law." Section 36 makes it the duty of the city treasurer, immediately after the city council has made an order approving the bond of the depository selected, to transfer to such depository all the funds in his hands belonging to the city, and thereafter as he receives such funds to deposit same with such depository. Section 37 declares that "no money belonging to the city shall be paid out of the city depository except upon checks of the city treasurer." Section 39 declares that "no check shall be drawn upon the city depository by the treasurer except upon a warrant signed by the mayor and attested by the secretary." The portions quoted of said act 1905 are consistent with those provisions of the law which give to the city council the management and control of the city finances and forbid the disbursement of any of the funds belonging to the city, except as ordered by the city council (Sayles' Ann.Civ.St. 1897, arts. 414, 415, 409), and are not consistent with a right in a creditor to subject such funds, while held in the depository, to the satisfaction of his debt by the process of garnishment. If such a right exists in favor of one creditor, it exists in favor of every creditor of a municipal corporation operating under the general law. If it exists and can be exercised by one, it can be exercised by each of such creditors. It is easy to foresee what would be some of the results of an exercise of such a right by creditors of a city. Its revenues, which should be devoted to the accomplishment of the purposes for which it exists as a municipality, would be wasted in the payment of court costs, etc., and it soon would be without means to carry on its governmental affairs. We are unwilling to concede that a right, the exercise of which might be fraught with such consequences to a city, exists in favor of its creditors. The provisions of the statutes referred to, and others exempting from forced sale property owned and held by cities for public purposes (Sayles' Ann.Civ.St. 1897, art. 2399) and empowering the city council "to appropriate money and provide for the payment of the debts and expenses of the city" (Sayles' Ann.Civ.St. 1897, art. 415), indicate the policy of the law to be against the existence of any such right in the creditor of a municipality. The funds of the city while in its depository should, we think, be regarded as in the hands of an agent of the law, and should be held to be disbursable by it only in the way designated by law. Curtis v. Ford, 78 Tex. 268, 14 S.W. 614, 10 L.R.A. 529; Pace v. Smith,57 Tex. 558; City of Sherman v. Smith, 12 Tex. Civ. App. 580, 35 S.W. 296; Brooks v. Cook, 8 Mass. 246; 14 A. E. Ency. Law, pp. 808, 817.

But, if we thought the bank as the depository of funds belonging to the city was liable to be summoned as a garnishee, we would be of the opinion, nevertheless, that the judgment should be affirmed. Appellants seem to concede that they were not entitled to have their judgment paid out of any of the funds held by the depository for special purposes designated by the city council. Their contention is that the $1,426.51 held in the depository for general purposes of the city should have been applied to the payment of their judgment. As before stated, it was shown that this fund was the only fund available to the city out of which to pay its current expenses, and that it was wholly insufficient for that purpose. It seems to be the rule that such expenses are entitled to priority of payment as against other indebtedness of the city, out of its revenues, and that the excess of such revenues over and above such expenses alone can be looked to for the satisfaction of such other indebtedness. In City of Sherman v. Shobe, 94 Tex. 126, 58 S.W. 949,86 Am. St. Rep. 825, Chief Justice Gaines said: "It is only upon the surplus of the general revenues of a county (city) that remain after the current expenses have been paid that a general creditor has a claim, and to subject that surplus to the payment of his debt the writ of garnishment is not the remedy." And see City of Sherman v. Smith,12 Tex. Civ. App. 580, 35 S.W. 296; Gordon v. Thorp, 53 S.W. 361; City of Sherman v. Williams, 84 Tex. 421, 19 S.W. 606, 31 Am. St. Rep. 66; City of Denison v. Foster, 37 S.W. 167.

The judgment is affirmed.